I am just starting to trade Forex and I am most interested in trading the news. Does anyone using the strategy have any tips? How profitable are you using this strategy? Can you rely solely on a news report or do you need supplement it with other strats?
Well itâs a good way to have your heart (trading account) carved up and fed to you on a paper plate if thatâs what youâre asking.
There are so many reasons why itâs not a good idea but hereâs just a few off of the top of my head and that come to mind at the moment:
Most of the time the news is already built into price anyway. Only when you get surprises is there usually enough movement and a point to even attempt to make some money.
You as a retail trader will never have the news in time to react. Usually by the time you have the release price has already started to move. And because it moves so fast you will have a hard time getting filled. So what happens??? You place your order at market and your broker cannot execute the order but as if by magic they manage to execute your order right at the very top or bottom of the move. So now youâre in a position and price has already started to retrace against you. Now you try to close the position to minimise your loss and the broker cannot do that either because price is moving too fast. But the position will get closed out eventually when things settle down. Now youâre down both ways.
Using the above scenario so now youâre going to get clever and place stop orders. Sorry. Very high volatility at news times (surprises) so either your order does not get executed at all (this being the BEST case scenario believe it or not) OR your order gets slipped and again gets filled at the worst possibly price which is usually right there where price is starting to retrace. And so on and so forth.
Now even assuming that any of the above was avoidable (which itâs not as a retail trader but thatâs beside the point): do you have the knowledge and experience to be able to asses in which direction price is going to spike based on the news data??? If youâre new to this game and your answer is yes then youâre lying to yourself.
Last but not least (and notwithstanding things that Iâve forgotten at this time): donât be fooled if youâve tried this all nice on a demo account and it appears to work. Demo accounts are notorious for not reflecting how things are in the real world. With reference to my above scenario described: on a demo account your orders (market or other) will in all probability ALWAYS get executed at the exact same price at which you have placed them (market or otherwise). This is because demo accounts are automated i.e. thereâs not dealer on the other side.
Oh. Almost forgot. Then there are these brokers that will disconnect platforms just before and just after news data releases. And if you just happen to have been lucky (or unlucky as the case may be) to even be in a position: chances are youâll not be able to get out of it until price has settled again and the platform has returned to life as if by magic.
You still want to try this???
Unless you have a really in depth knowledge and can therefore get into these trades BEFORE the news release: youâre wasting your time. And even then itâs no exact science i.e. successful news traders can and do get it wrong sometimes (and even those that know what theyâre doing cannot rely on their stop loss orders being executed).
If I think of anything else Iâll be sure to let you know.
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Thanks for the input. I did not know that on live trading that you could have a hard time filling orders during news events. It is understandable that some brokers would not like for you to blow your whole account on a Donald Trump tweet.
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I think, news trading is more challenging than the technical based trading; till now I have to improve my trading skill on news trading.
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I think itâs a to risky personally
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Hey.
Sorry Iâm only responding now. Had my own issues today thanks to good 'ol Donald there.
Anyway.
Yeh. In live trading, and even with a legit and reputable broker, slippage is just part and parcel of trading. The reason being is that your broker can only fill your order at the first available price. The key here is âavailableâ. When markets are just doing their thing as usual then itâs almost always your price (doesnât matter if itâs a market order or a stop order or a limit order). But: when thereâs huge movements exactly of the type that you see when news data is released then price moves so fast that your broker just no longer has access to your desired price and will then have no choice but to fill your order at the first available price to them. Itâs just the way it works. Now unfortunately: a rotten broker can use this to their advantage and you will never be able to call them out on it. They can delay execution of your order and only execute it at the worst possible price even although a better price could have been available to them at some point during the move. Bear in mind that the dudes that work at dealing desks are no amateurs either. And, well, pretty easy to program software to take advantage of this type of thing.
So in short: I still maintain itâs not for retail traders. Guys that are serious about trading the news plough a lot of money into very high speed data feeds etc. Matter of fact (and what some people donât know) is that you can even rent (for a very big fee) space inside the NYSE or NASDAQ so that your computer system is in close proximity to their gear. The obvious reason for this is speed. Those guys will have the edge when it comes to this type of thing because they really are getting the information and their orders in and out split seconds before you. By the time you get it: itâs all over and theyâre getting out at pretty much the time youâre TRYING to get in (waiting for your broker to execute your order).
NOT an easy way to make money thatâs for sure.
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Itâs possible to trade news. Very difficult though. Takes years or experience. Iâve lost a lot of money doing this but lately am able to pick which news and data I want to trade and do well enough. Too many things to consider for a beginner though.
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News trading is not so reliable in my opinion. Most of the news is just plain noise as per my observation. It doesnât work for me.
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thatâs good, continue
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You just lack the knowledge and experience to make it work. You donât understand or have not experienced what kind of news will really move markets, or whatâs been priced in or what hasnât. Or maybe it doesnât suit your mindset. But youâre right in not trading the news if it doesnât work for you. But donât write it off, it works for a lot of other people.
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I would love if you shed more light into which news to trade and which news not to trade?
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Iâm still learning myself. Depends which asset youâre talking about. Name an asset and maybe Iâll give you an initial list of what you need to consider. But be sure it will be a very long list.
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there have been some interesting points raised already concerning news trading. @dpaterso made the point the news has been built into the technicality of trading.
This is because price movements in terms of its direction are a result of a combination of the impact of the last set of news from a country and an anticipation of the expected set of news from the next or up coming period. That is why the news calendar usually shows the last result and the anticipated result of the next release. If its a drastic or significant change in the calculated or expected figure, then that creates the spike and/or movement that happen immediately the actual news report is released.
To shed more light on the subject based on my earlier clarification. One of the biggest miss conception of the new or in experienced trader is differentiating between trading the news and trading during the news release. It is an understanding of this two concepts that makes you a more complete trader.
News trading from my knowledge of the bigger trader is more of trading the expectations and ignoring the news release. I have followed @ Gilas Trading for some time and read him write about trading in the direction of his bias. every consistently profitable trader must understand this except you maintain a stop-loss level that is built on monthly or weekly s/r levels
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1889 experienced trader: dont trade the news
New trader: but i can make it work
1905 experienced trader: dont trade the news
New trader: but i can make it work
1925 experienced trader: dont trade the news
New trader: but i can make it work
1939 experienced trader: dont trade the news
New trader: but i can make it work
1957 experienced trader: dont trade the news
New trader: but i can make it work
1968 experienced trader: dont trade the news
New trader: but i can make it work
1976 experienced trader: dont trade the news
New trader: but i can make it work
1985 experienced trader: dont trade the news
New trader: but i can make it work
1999 experienced trader: dont trade the news
New trader: but i can make it work
2007 experienced trader: dont trade the news
New trader: but i can make it work
2019 experienced trader: dont trade the news
New trader: but i can make it work
I hope you get the picture
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I donât maintain stop loss levels based on weekly or monthly S/R. Have never mentioned anything like that, please donât make it appear like I said something which I clearly didnât, even you you didnât make it seem like a direct quote.
I both trade the news and trade news releases. But I donât trade them all. Itâs correct that both are different things altogether, but there are so many nuances to each that unless you try to trade so very many news and news releases for a good period of time youâll likely end up with losses. If youâre a newbie or amateur, you can try on a demo or live but with very small positions. Youâll lose a lot of money before you really start to grasp how to do it.
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Awesome reply! Once again outstanding job, really appreciate your efforts!
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'âStuck in a dumb Brent long. Tried to catch a falling knife, went against major rules of my system, just because I felt I could do no wrong after all the major gains Iâve made. Hope I at least can get out of this breakeven or with small losses. Currently stuck 380$ 
13 lots whew. I vow to never trade against my funda bias ever again. At one point I was stuck 560$.â'
Does this look like one of your write-up on your journal 10 days ago from today. That is what I referred to except you want to further make explanations on it. I never referred to you on stop loss positioning.
This is not to prove a point not withstanding. I have been on this line for some time now . over 9 year on this forum too and have not stop learning from the forum here just to improve my already consistently profitable trading.
I hope this clears things up my Filipino friend
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You can add:
2005 experienced trader: dont trade the news
Dale: but I can make it work
LOL!!!
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basically you are telling retail traders, you might have a very good intuition but the market (or broker) is not playing fair game
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If you are a trader who have good knowledge of market behaviors then you can rely on fundamental analysis while a trader needs to employ attention on significant market news. but one thing is very important to remember that not all market news will be significant to give emphasize. A trader must differentiate among reliable and insignificant news.
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